ALISON ASHLEY PECK, as a QUALIFIED BENEFICIARY OF THE PECK FAMILY TRUST and THE PECK MARITAL TRUST, AND IN HER INDIVIDUAL CAPACITY APPELLANT
HANNAH PECK a/k/a HANNAH FINLEY, INDIVIDUALLY, AND AS TRUSTEE OF THE PECK FAMILY TRUST U/D JUNE 15, 2001, AND AS TRUSTEE OF THE PECK MARITAL TRUST APPELLEE
FROM THE PULASKI COUNTY CIRCUIT COURT, SIXTH DIVISION [NO.
60CV-14-1883] HONORABLE TIMOTHY DAVIS FOX, JUDGE
Eichenbaum Liles, P.A., by: James H. Penick III, for
Richard F. Hatfield, P.A., by: Richard F. Hatfield, for
PHILLIP F. WHITEAKER, Judge
Peck brings this appeal from the order of the Pulaski County
Circuit Court dismissing her first amended complaint against
appellee Hannah Peck Finley where she alleged that Finley
breached her fiduciary duties to Alison under a family trust.
We hold that the circuit court did not conduct a proper
analysis of the motion to dismiss; therefore, we reverse and
remand for further proceedings consistent with this opinion.
Factual and Procedural History
current appeal is a part of a series of litigation over the
Peck Family Trust and the Peck Marital Trust created by
Robert Peck. Robert Peck was the father of Alison and the
husband of Finley. He created the Peck Family Trust, a
revocable trust, on May 8, 2001. Robert created the trust for the purpose
of providing for the support, education, maintenance, and
preservation of the health of Finley during her lifetime.
Robert was to be the trustee during his lifetime, with Finley
named as trustee upon his death. Robert also created trust
provisions for his children. Upon the death of Finley, the
trust assets were to be divided among beneficiaries,
including Alison. Robert Peck passed away in 2006 and was
survived by Finley, Alison, and his other three
Robert's death, issues arose concerning the assets of the
trust. In particular, the ownership of a mobile by Alexander
Calder known as "Autumn Leaves" ("the
Calder") was questioned. The Calder was purchased by
Robert's parents in the 1950s, and Robert had possession
of the Calder after their deaths. Upon Robert's death,
Finley assumed possession of the Calder. Finley maintained
that she received the Calder under her husband's
will.Finley eventually sold the Calder
for $3.3 million net after commissions. Finley deposited the
proceeds into her own personal account and not the account of
the trust. Finley also invested the proceeds, which resulted
in some major losses.
2008, the first lawsuit in this series of litigation began.
Finley filed a declaratory-judgment action (the 2008 action)
to determine ownership of the Calder. Finley sued Alison and
her three siblings, as well as her own children, as
defendants. Alison defended the 2008
action, taking the position that Finley did not own the
Calder but that the Calder was instead owned by one of her
siblings, Capi Peterson. Alison also filed a counterclaim
asserting that Finley had breached her fiduciary duties to
her and her siblings, that Finley was liable as trustee to
them, and for an accounting. The 2008 action was dismissed
without prejudice in October 2009.
October 2010, the second lawsuit in this series of litigation
occurred (the 2010 action). Capi Peterson filed an action
against Finley, as trustee. Peterson alleged that she was the owner of
the Calder as the recipient of an inter vivos gift, that
Finley wrongfully sold it to a third party, and that Finley
was liable to Peterson for its value. Peterson sought an
accounting for the Peck Family Trust and damages for the sale
of the Calder. Finley answered the complaint and
counterclaimed for a declaratory judgment to determine that
ownership of the Calder was in the Peck Family Trust and that
Peterson had violated the terms of a share-cancellation
provision of the trust. After a bench trial, the circuit
court dismissed Peterson's complaint, finding that the
Calder was an asset of the trust, that there was no evidence
that Finley acted in bad faith or with reckless indifference
with regard to her trust duties, and that Peterson had
forfeited her interests in the trust through the
share-cancellation provision and thus lacked standing to sue
as a beneficiary of the trust.
appealed, and we affirmed the circuit court. Peterson v.
Peck, 2013 Ark.App. 666, 430 S.W.3d 797. In that case,
we held that Peterson failed to prove the elements of an
inter vivos gift. We also affirmed the court's
determination that Peterson forfeited her interest in the
trust because her amended complaint questioned Finley's
actions as trustee without any evidence that Finley had acted
in bad faith.
2014, the current lawsuit in this series of litigation began.
Alison originally sued Finley seeking a declaratory judgment
of Finley's duties as trustee and her own rights as a
beneficiary to be kept promptly informed of all material
information regarding administration of the trust. Alison
also asserted that Finley was required to produce reports
beginning in 2006 but failed to do so despite repeated
requests, and that Finley acted in bad faith and with
reckless disregard of Alison's rights and otherwise
failed to administer the trust in good faith.
adamantly defended the cause of action. Finley responded
initially to Alison's original complaint with a motion to
dismiss seeking dismissal under two theories. First, she took
the position that Alison was barred from asserting her claim
by the savings statute. Essentially, she argued that Alison
filed a counterclaim in the 2008 lawsuit, voluntarily
nonsuited this claim, and failed to refile it within one
year. As a result, she was precluded from doing so now by the
savings statute. Second, she took the position that
Alison's pleadings in the 2008 action asserting that
Peterson owned the Calder and that Finley had breached her
fiduciary duties triggered the share-cancellation provision
of the trust, thus forfeiting her interest as a beneficiary
and depriving Alison of standing. The circuit court denied
the motion to dismiss without explanation.
next answered the complaint, denying that Alison was a
qualified beneficiary of the trust or had standing to seek a
declaratory judgment because of the prior 2008 action. She
also filed a motion for summary judgment, asserting that
Alison's interest in the trust had been forfeited because
of the prior 2008 litigation. Finley later amended her motion
for summary judgment, contending that the interests of Alison
and her sister, Peterson, were so intertwined that they stood
in privity with each other and therefore res judicata barred
relitigation. The circuit court denied Finley's motion
and amended motion for summary judgment by separate orders
the denial of the summary-judgment motions, Alison amended
her complaint, seeking a declaratory judgment and adding
claims for conversion, breach of fiduciary duty, deceit, and
unjust enrichment or the imposition of a constructive trust.
She also sought an accounting and punitive damages. Finley
responded with a motion to dismiss, arguing that Alison Peck
was a contingent, rather ...